The Palace is a software program used to access two-dimensional virtual communities, also called palaces. A typical palace is represented as a series of flat backgrounds with one or more clickable areas, or doors, and players represented by either the default spherical avatar or a user-created avatar up to 132×132 pixels large, with an 8-bit color palette.

The biggest Palace legacy on internet is in fact the Dollz created almost 10 years ago as Palace avatars. Because the Palace has a flexible avatar system someone figured it was fun to make a simple body you could dress up. Once the member has created an avatar to represent herself or himself, the member can pick up various pieces of clothing or other items, such as hats, handbags, cans of soda, candy bars, bicycles, or hand tools.

As in many other Virtual Worlds, prestige is shown through the intricacy of the user's avatar. Some users sign on with two or more clients in order to blanket their avatar across a higher area to give themselves more area to express themselves.

The Palace was created by Jim Bumgardner, an employee of Time Warner Interactive, in 1994. Bumgardner incorporated many features of Idaho, an in-house authoring tool he had previously developed for making multimedia CD-ROMs. One of those features was iptScrae, a Forth-like programming language. The name is a play on the word "script," in Pig Latin. One of the unique features of the Palace, for its time, was that the server software was given away for free, and ran on consumer PCs, rather than being housed in a central location. This is one of the reasons why Palaces are still running today.

The Palace's source code, along with that of its associated server software, was the subject of a number of sales between companies until 2001, when it was purchased by Open Text Corporation as part of a bankruptcy settlement. The software is currently unsupported by Open Text or any of its previous owners, and many members of the community now consider the software abandonware and provide support for existing versions on various unofficial web sites.

There are no official Palace software developments but two groups have decided to make alternative clients: PalaceChat: Jameson Heesen, created PalaceChat for Mac OS X. Brainhouse Laboratories, is currently producing Phalanx Visual Chat.

Like many projects there are some drawbacks and most people decide to stick with the old and outdated client for as long as their operating system supports it. But Phalanx has been eliminating drawbacks, and will soon be a complete and viable replacement for the original software on the Windows 2000/XP and newer platforms.